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304.7-405 Rated credit instruments.
Subject to the limitations of subsection (6) of this section, an insurer may acquire
rated credit instruments:
(1) Subject to the limitations of KRS 304.7-403(2), but not the limitations of KRS
304.7-403(1), an insurer may acquire rated credit instruments issued,
assumed, guaranteed, or insured by:
(a) The United States; or
(b) A government sponsored enterprise of the United States, if the
instruments of the government sponsored enterprise are assumed,
guaranteed, or insured by the United States, or are otherwise backed or
supported by the full faith and credit of the United States.
(2) (a) Subject to the limitations of KRS 304.7-403(2), but not to the limitations of
KRS 304.7-403(1), an insurer may acquire rated credit instruments
issued, assumed, guaranteed, or insured by:
1.
Canada; or
2.
A government sponsored enterprise of Canada, if the instruments of
the government sponsored enterprise are assumed, guaranteed, or
insured by Canada or are otherwise backed or supported by the full
faith and credit of Canada;
(b) However, an insurer shall not acquire an instrument under this subsection
if, as a result of and after giving effect to the investment, the aggregate
amount of investments then held by the insurer under this subsection
would exceed forty percent (40%) of its admitted assets.
(3) (a) Subject to the limitations of KRS 304.7-403(2), but not to the limitations of
KRS 304.7-403(1), an insurer may acquire rated credit instruments,
excluding asset-backed securities:
1.
Issued by a government money market mutual fund, a class one
money market mutual fund, or a class one bond mutual fund;
2.
Issued, assumed, guaranteed, or insured by a government
sponsored enterprise of the United States other than those eligible
under subsection (1) of this section;
3.
Issued, assumed, guaranteed, or insured by a state, if the
instruments are general obligations of the state; or
4.
Issued by a multilateral development bank;
(b) However, an insurer shall not acquire an instrument of any one (1) fund,
any one (1) enterprise or entity, or any one (1) state under this subsection
if, as a result of and after giving effect to the investment, the aggregate
amount of investments then held in any one (1) fund, enterprise, entity, or
state under this subsection would exceed ten percent (10%) of its
admitted assets.
(4) Subject to the limitations of KRS 304.7-403, an insurer may acquire preferred
stocks that are not foreign investments and that meet the requirements of rated
credit instruments if, as a result of and after giving effect to the investment;
(a) The aggregate amount of preferred stocks then held by the insurer under
this subsection does not exceed twenty percent (20%) of its admitted
(5)
(6)
assets; and
(b) The aggregate amount of preferred stocks then held by the insurer under
this subsection which are not sinking fund stocks or rated P1 or P2 by the
SVO does not exceed ten percent (10%) of its admitted assets.
Subject to the limitations of KRS 304.7-403, in addition to those investments
eligible under subsections (1) to (4) of this section, an insurer may acquire
rated credit instruments that are not foreign investments.
An insurer shall not acquire special rated credit instruments under this section
if, as a result of and after giving effect to the investment, the aggregate amount
of special rated credit instruments then held by the insurer would exceed five
percent (5%) of its admitted assets.
Effective:July 14, 2000
History: Created 2000 Ky. Acts ch. 388, sec. 9, effective July 14, 2000.
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